Introduction

In December 2003, the U.S. Environmental Protection Agency (EPA) announced its long-awaited proposal for regulating mercury emissions from coal-fired utilities. This regulation was widely expected to require a 90% reduction in mercury emissions from these facilities--from approximately 48 tons to 5 tons--to be achieved by 2007. Instead, EPA proposed a rule that would permit coal-fired utilities to continue to emit more mercury for a longer time. In fact, EPA offers two potential approaches, neither of which would require sources to do much to reduce their mercury emissions until well into the next decade. EPA clearly favors a cap-and-trade approach, so expends some effort to locate a statutory home for this approach within the federal Clean Air Act's (CAA's) provisions for toxic air emissions. Perhaps unsure of its success, EPA also produces a technology-based standard, following the ordinary process for regulating air toxics under §112 of the Act. However, the maximum achievable control technology (MACT) standard EPA fashions is so far off the mark that it can only have been intended to serve as a foil for EPA's preferred approach.

EPA's attempt to avoid the steep emissions reductions required by MACT and apply the tool of cap-and-trade to the problem of mercury has met with a raft of criticism. The clamor over the proposed rule is not surprising, given the procedural irregularities that have come to light, given the creative interpretations of the CAA on which EPA's proposal rests, and given, importantly, what is at stake from mercury contamination. This critical attention is warranted as well because cap-and-trade, like other regulatory tools, has strengths and weaknesses that make it well suited for some environmental problems but ill suited for others. For a variety of reasons, cap-and-trade--at least as fashioned by EPA--may simply be the wrong tool to address the problem of mercury.